YIP-99 Delegate the UMA in our treasury to a contributor

**YIP- TBD **

Basic Summary
Yam is currently sitting on over 20k UMA in our treasury. Owning UMA gives you the ability to contribute price information to the DVM and contribute to UMA protocol governance decisions through voting.

At this moment the DAO is not contributing to this process, but could by utilizing the UMA audited voting-2key contracts put forth by Risk Labs.

Abstract - What am I proposing?

  • Utilize a voting 2key contract to delegate UMA to a contributor.
  • Incentivize this contributor to vote by splitting the rewards earned through voting correctly.

Motivation - Why am I proposing it?

Presently about 20% of the total supply of UMA is voting ~(20M UMA). Rewards are currently sitting at around 50k UMA per vote (currently set at .05% of total supply by UMA governance).

By not voting, One can conclude that the DAO is missing out on 0.0025 / UMA in inflationary voting rewards per vote.

Specifications - How am I proposing it is accomplished?
What would be required from a technical perspective to execute this proposal? If some work has already been done, detail that here, as well as make clear what will need to be accomplished in the future.

  1. Nominate a delegate.
  2. Have the delegate create a DesignatedVoting contract that has the owner set as the YamGovernorAlpha.
  3. On-chain transaction to transfers the UMA to the designated voting contract.

Poll to Measure Sentiment

Should we delegate the UMA in the treasury?
  • Yes
  • No

0 voters

What percentage of the rewards should the DAO receive?
  • 0%
  • 20%
  • 35%
  • 50%
  • 75%
  • 100%

0 voters

1 Like

Hey Snake, This is a great proposal. I have a few questions:

  1. Can the DAO lose UMA in any way by doing this? i.e. If the delegate votes incorrectly, is there slashing?
  2. Based on our current treasury UMA holdings and your numbers. this would yield about 50 UMA per vote. Am I correct that this refers to the monthly votes, so this comes out to roughly 50 UMA per month, or are there multiple votes per month? Given the current UMA amounts in the treasury, what do you predict that doing this will earn on a yearly basis (in UMA)?

Thanks for putting this together!

Thanks Ross and thank you for your great questions.

  1. No there is no way to lose UMA, however inflation rewards are only earned when voting with the majority. A voter is compensated for eth gas costs by UMA either way. More about the gas rebate program can be found here. This program is subject to change though.

  2. That is incorrect, there are multiple votes per month and it is based around price feed disputes or governance proposals There could be multiple votes per month or none. That said we could take a look at the last few months for an idea of how it has been going. In the last 3 months, there have been 23 votes and the average was around 7-8 votes per month. Using your numbers that would have amounted to 1150 UMA in rewards. Extrapolating that out to a year is 4,600 UMA or 43,746 USD @ 9.51 /UMA. This is a rough figure for many reasons.

Let me know if you have any more questions.

1 Like

Thanks for the answers. One more question.

If the person to whom the DAO has delegated their UMA stops voting, is it easy for governance to delegate to someone else?

I wonder if we should have clear rules about missing a certain number of votes that would trigger an election for a new delegatee. Hopefully not needed but I am trying to gameplan worst case scenarios.

The contract, DesignatedVoting, allows for management of the roles and the proposed implementation here is to make YamGovernorAlpha the owner.

The contract has baked in functionality to allow for managing roles. So yes, in my opinion, the difficulty of removing the delegate should not be a concern.

Such rules would need to be enforced through a governance proposal unless we developed a custom contract that enforced these rules. I believe a custom contract is outside the scope of this proposal. A governance proposal to remove the delegate, split the delegate power, etc. would not be limited by what is being proposed here.

The worst case scenario as an outcome of this proposal’s proper implementation would be the same as not moving forward with this proposal at all. That is to say, if the delegate votes incorrectly or doesn’t vote at all, the DAO is in no worse position than it is today.

If the delegate votes correctly( with the majority), the DAO ( through the governor) is in control of the rewards and may transfer any split allocated to the delegate in the proposal that withdraws the rewards.

That is how this initial implementation works and anything outside of that flow might need custom contract development.

1 Like

I nominate @Snake to be the UMA representative for this proposal.
Compensation should be determined with respect to amount of time/work required and the gain for the treasury from this.
Compensation overall needs to be streamlined, @ross has another thread on potential paths forward. Instead of a % of UMA rewards, because to pay in UMA requires a few steps as @snake has outlined (needs to be removed from UMA voting rewards contact instead of from the standard contributor payment processes). It would be prudent to include payment with @ross suggested update in contributor compensation system.

Feddas

3 Likes

I agree @Snake a good choice for this. I defer to his expertise on how much work this will take and what an acceptable percentage of the rewards for the work required.

Doing the accounting for this could be as simple as a monthly update on the votes participated in, the rewards earned for the treasury, and what the percentage of that is in UMA tokens that we should send back to his wallet. This could get paid out in the same way that I have proposed all compensation gets paid here: Contributor Compensation and Transparency report Process Change Ideas. Basically as an invoice for work done. Because Snake will be the person delegated to, no one else can earn these rewards unless governance changes who the delegate is. If someone else comes along who thinks they can do an equal job for less then they can apply to governance for the position.

@snake, if you agree to the nomination, do you want to update the proposal to propose yourself and outline what you think is a fair ask for this work? Then we can move forward with a snapshot vote and get going on the implementation.

2 Likes

Poll was closed for me, but I’m in favor of this as well and concur that @Snake would make a great delegate for this if he so chooses.

Long Term Idea: The possibility of Yam intermediating this process at some point with our own contract and frontend that would allow any $YAM holder to vote on behalf of the DAO and earn a percentage reward for doing so. This would align well with our general vision for decentralizing DAO processes and also provide another way for non-core contributors to proactively participate in the DAO.

In favor of Snake as well! Let’s do this